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The Deal: Brief Concern over Life Tech. Deal Tweaks Stock

NEW YORK (The Deal) -- The spread for the $13 billion acquisition of Life Technologies Corp. by Thermo Fisher Scientific (TMO) tweaked out late last week apparently over some regulatory concerns, but Thermo considers the merger on track.

The $76 per share cash deal is under review by the Federal Trade Commission and requires EU approval and the approval of the Ministry of Commerce of the People's Republic of China. The FTC issued a second request in June and risk arbitrage sources do not think the deal raises substantive antitrust concerns in the U.S.

The EU review deadline was extended two weeks to Nov. 26 to allow time for the competition commission to review commitments submitted in early November.

The merger also requires approval in China under MofCom, which could be the final hurdle for the deal. Apparently some concern about the timing of the review ticked the spread out late last week from about 40 cents to slightly more than 50 cents.

According to some arbs, a report on the regulatory process raised the notion that the China review could pose timing delays because of procedural issues, but not that there is any issue that suggests the deal would be in trouble.

Thermo Fisher declined to comment on the specifics of the process but said it still expects to close the Life Technologies deal early in first quarter of 2014.

Thermo Fisher has a $5 billion term loan for deal financing and on Nov. 14 entered an agreement for a private placement of up to 5.3 million shares for $500 million to partially fund the merger. The placement expires if the deal does not close by the end of March. Thermo also said it expects to fund a portion of the transaction with a bond issuance.

The merger does include a ticking fee if it does not close before Jan. 14. After that date, Life technologies shareholders receive a daily payment of $0.0062466 per day, which translates to an annualized bump of 3%.

Written by Scott Stuart.

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